Title: One vendor and multiple retailers system in vendor managed inventory problem with stochastic demand

Authors: Cahyono Sigit Pramudyo; Huynh Trung Luong

Addresses: Department of Industrial Engineering, Faculty of Science and Technology, State Islamic University 'Sunan Kalijaga', Yogyakarta, Indonesia; Industrial and Manufacturing Engineering Field of Study, Department of Industrial Systems Engineering, School of Engineering and Technology, Asian Institute of Technology, P.O. Box 4, Klong Luang, Pathumthani 12120, Thailand ' Industrial and Manufacturing Engineering Field of Study, Department of Industrial Systems Engineering, School of Engineering and Technology, Asian Institute of Technology, P.O. Box 4, Klong Luang, Pathumthani 12120, Thailand

Abstract: In many supply networks, the retailers are reluctant to share information about demand and inventory level to the vendor. This might lead to many difficulties for the vendor in establishing his own order/production plan. Vendor managed inventory (VMI) policy can help to solve that problem. By applying VMI, information sharing is not really a problem for the vendor anymore and this policy have been proven to help reduce total inventory cost as well as improve customer service level in the supply network. In this research, a VMI model for the system with one vendor and multiple retailers will be developed. The main target of the model is to determine the retailer's lot size, the vendor's lot size, the retailer cycle time, and the number of replenishments in a vendor cycle so as to minimise the total system cost. For solution purpose, simulation-optimisation technique using genetic algorithm is employed to help find optimal solutions for the decision variables. Numerical experiments are conducted to show the applicability of the proposed model. Sensitivity analysis is also conducted to examine the effects of some input parameters on the optimal solution.

Keywords: vendor managed inventory; VMI; simulation-optimisation; genetic algorithm.

DOI: 10.1504/IJISE.2019.096888

International Journal of Industrial and Systems Engineering, 2019 Vol.31 No.1, pp.113 - 136

Received: 06 Jul 2016
Accepted: 22 Jan 2017
Published online: 13 Dec 2018 *

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